Unions attacked the spending review, saying it is clear the Government needs a Plan B because of the "failure" of its policies.

Dave Prentis, general secretary of Unison, said: "The Chancellor has got it horribly wrong. Despite all the promises, the austerity measures and cuts, he still hasn't got the country out of recession.

"We are still in the slowest economic recovery in 100 years and yet all we get from this Chancellor is more of the same. The Government is losing grip on economic reality if they continue travelling down the same path, expecting to arrive at a different destination."

Terry Scuoler, chief executive of EEF, the manufacturers' organisation, said: "These overall numbers come as no surprise and, given the Government's approach to this review, the settlement is as good as can be expected.

"Crucially, the Government has prioritised spending in the areas that will deliver a greater growth dividend. Investing in science and innovation, export promotion and skills is critical to create a strong more balanced economy. It's also great to see the Government raising its ambition on investing in our infrastructure but it must ensure that ambition translates into delivery."

Public and Commercial Services union general secretary Mark Serwotka said: "While his mantra is that he is dealing with our debts, the fact is George Osborne is actually borrowing more for failure and has led our economy into the longest and deepest slump since the 1870s."

Mike Cherry, of the Federation of Small Businesses, said: "It is good that the Government has taken a long-term view of how to plan capital spending to the end of the decade.

"The FSB said in its submission that a longer-term view needed to be taken. However, what we now need is a clear timetable for delivery. Small firms tell us that school-leavers aren't ready for the world of work, with many concerned about their ability in maths and English. Giving the funding direct to schools should be used to address this issue. The continued investment in science, technology and apprenticeships is also good news."

John Cridland, Director General of the CBI , said: "The Chancellor has carefully walked a tightrope of protecting growth, while making sizeable savings to pay down the debt. Infrastructure is rightly singled out as the most effective engine for growth, as we urged. While the Government talks a good game on infrastructure we've seen too little delivery on the ground so far.

"It is critical we see a real pipeline of projects announced tomorrow, so investors know what schemes are going ahead, where and when. Other pro-growth areas including science, innovation, skills and exports have also been shielded from cuts."